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Indiana Beer Battle Keeps Brewing

Dozens of convenience stores and gas stations are applying for alcohol sales permits, hoping to beat potential legislation that could restrict their ability to sell liquor.

June 26, 2006, 08:00 pm

FORT WAYNE, Ind. -- A debate that has been brewing in the state of Indiana over whether gasoline stations that sell snacks and drinks should also be allowed to sell alcohol is bubbling over as the number of new alcohol sales permit applications being filed by convenience stores and gas stations is quickly rising, The Journal Gazette reported.

The Indiana Association of Beverage Retailers, whose membership includes liquor store owners, is alarmed by the increasing number of new permit applications being filed by c-stores and gas stations hoping to beat potential legislation that could restrict their ability to sell liquor.

"We've already had as many gas stations apply this year through the end of May as we had all of last year," said John Livengood, the Indianapolis-based trade group's president.

Through June, according to data gathered by the beverage retailers association, 102 new convenience store permit applications have been filed. In 2005, the total was 46. Going back to 1999, the number for the full year has never exceeded 67 -- the number filed in 2001. After permits are granted, they must be renewed every two years.

The beverage retailers association argues that c-stores and gas stations shouldn't be allowed to sell alcohol, citing concerns about unlicensed clerks and potential sales to minors. But the Indiana Petroleum Marketers and Convenience Store Association contends that its members are responsible business owners in an industry that -- for the most part -- relies on alcohol sales for its profitability.

The state's Alcohol & Tobacco Commission has 83 categories and subcategories of alcohol permits, including specific designations for fraternal clubs and resort hotels. "Convenience store" doesn't have a separate classification, so they file under the "grocery" category.

The Indiana Association of Beverage Retailers has lobbied the state General Assembly for more than 10 years, asking legislators to adopt language that defines a grocery store more precisely. The legislation hasn't passed, but convenience store owners are spooked, so they are seizing the opportunity to petition for permits before restrictions are passed, the report said.

Livengood, who wants to stop convenience stores from getting grocery liquor sales permits, argues that safety is the primary issue. He expects sales of alcohol to underage buyers to increase as a result of more convenience stores and gas stations selling beer.

Minors, he said, aren't allowed to even walk through the doors of liquor stores. "(But) excise officers don't sit in the parking lots of gas stations," he noted.

Andy Lebamoff, co-owner of Cap N' Cork, said the Fort Wayne-based liquor store with 13 locations employs clerks ages 21 and older who are licensed to sell alcohol. The employees also participate in a state-mandated annual training session. C-store clerks, by contrast, must be 18 to ring up an alcohol sale. But they don't have to be licensed, a process that excludes applicants with alcohol-related convictions, Lebamoff said, adding "They’re not regulated at all."

Scot Imus, executive director of the state's Indianapolis-based convenience store association, pointed out that convenience stores across Indiana already sell many age-restricted products, including alcohol and tobacco. And he estimates that 10 percent to 15 percent of the state's 2,600 convenience stores now sell warm beer and/or wine. The number would be higher, he said, if the state didn't forbid convenience stores from selling alcohol on Sundays and if it didn’t forbid sales of cold beer, "the way customers want to buy it."

Indiana is the only state, Imus said, that issues permits that differentiate between warm and cold beer sales -- allowing the first but prohibiting the second. Package liquor stores are allowed to sell cold beer.

In the convenience store industry, gas sales are usually a losing or break-even revenue stream. The stores have to draw customers inside and make their profits on products sold there, Imus said. Nationwide, alcohol is the second-highest selling product in dollar value in convenience stores, he said.

Many Indiana convenience stores "have an arm tied around their back" when it comes to making profits because they don't sell beer, Imus said.

Every conversation about the alcohol permit issue eventually comes around to the idea of creating an even playing field, according to the The Journal Gazette report.

Imus believes allowing convenience stores to sell cold beer would help create some parity, while Lebamoff, of Cap N' Cork, believes standardizing the rules regarding the hours of operation and age of sales clerks would make competition more fair.

"Right now, you have a controlled environment for us and an uncontrolled environment for them," Lebamoff said. "I'm in competition with the world's No. 1 retailer across the street (Wal-Mart). I'm not afraid of competition."

Lebamoff acknowledged, however, that the number of drinkers isn't likely to increase correspondingly if many more retailers start selling alcohol, so that would mean fewer sales for stores like his. The result, he said, could be locally owned liquor stores closing shop, while profits from alcohol sales are sent out of state to the owners of national chains.